Of course, we all remember 2019, when unusual droughts reduced drastically water supplies and led to electricity shortages. To react quickly, Cambodia contracted new coal power plants, as those can operate independently of the weather. Agreements for a massive 3,100MW of coal power projects were signed, 5 times more than the existing amount of coal power installed in Cambodia. The idea was to be able to balance the variability of hydroelectric power, while accounting for the yearly planned increase of future electricity demand.
Yet back in 2019, no one could have predicted the war in Ukraine, and the soaring global coal prices. When these agreements were signed, the coal price was around US$ 50 per ton. By March 2022 it was US$ 440 per ton. At the time these coal deals were signed, EDC announced the result of its first solar energy auction - a price of 3.87c/kWh, which was half the cost of coal power, years ahead of the current global fuel crisis.
If coal power was once seen as reliable, now is a different time. Coal ultimately decreases Cambodia's energy security and it is far more costly. Since then, financing for coal power plants has become very difficult to secure, because China, Japan, Korea and all major financiers committed to not support those. Hence, none of the coal projects that were approved in 2019 have started.
Cambodia Power Development Plan 2040 (PDP 2040) was recently considered by the Council of Ministers. Thankfully Cambodia announced no new coal plants. But this PDP 2040 includes the existing approved coal projects because it is difficult for Cambodia to cancel these contracts. This means Cambodia will increase its dependence on coal and fossil fuel power - shifting from 50% share of generation now, to almost 75% dependence by 2040. This excess of coal power will crowd out the opportunity to use the cheapest and cleanest sources of power - solar and wind. In fact, the PDP 2040 only plans to increase solar up to 14% of domestic supply, and mostly starting after 2030.
Yet the beauty of a plan is that one can revise and adapt it depending on circumstances. The difficulty finding finance may mean these projects won't go ahead anyway. But rather than waiting, Cambodia could plan and tap into the very abundant solar resources it has, and further decarbonise its economy while increasing its energy independence.
To do so, Cambodia's best interest is to start planning for more solar energy from today onward. Why wait until 2030? And why setting such a low target as 14%? Solar is the cheapest energy available of all, and it will get cheaper. Coal fired power plants are getting more expensive, more difficult to finance and take several years to build, while large scale solar projects are achieved in months. Yes, the variability of solar and wind energy needs to be accounted for, but several countries have proven that it is technically and financially feasible and reliable, but also scalable, using battery storage, forecasting and grid balancing systems. Several independent analyses have shown Cambodia's electricity grid has a VRE absorption capacity of a minimum of 30% of VRE, up to 40%. We have a lot of room to further develop solar, and multiply by 7 our current capacity over the coming 2 decades.
If Cambodia avoids the dangerous trap of getting locked in excess of coal and gas power, it can achieve its sustainable energy balance, integrating a larger share of the lower cost solar and wind power, known as Variable Renewable Energy (VRE). What this means in concrete terms is that Cambodia should keep its current coal assets and complete the ones that are almost finished. But it should not continue to build any new coal projects, or pursue the ones that are either unbuilt or at inception stage. Moreover, coal does not marry well with VRE as it does not allow the needed flexibility to balance the variability. However, storage, such as in batteries and hydro dams, and gas engines (like car engines that you can rapidly turn on and off), do help balance well the variability of solar and wind power.
And let's remember how planning is a crucial component to energy stability. Cambodia would benefit from adopting a Renewable energy strategy that can plan carefully how to integrate higher shares of lower cost solar into the grid. Modeling has shown it is technically possible; and economically better. A strategy would guide how Cambodia could target a sustainable energy mix that can balance well the particularities of each energy source, to ensure an affordable, reliable and sustainable electricity supply for all Cambodians. It would secure a strong economic future and contribute further to the global efforts to combat climate change.